L'Oreal, Walgreen's Look to Measure Effectiveness of Mobile Coupons

Ad tech startup Sparkfly is helping the megabrands track consumers from mobile apps to point of sale.

L'Oreal has teamed up with Walgreens and Duane Reade locations in Manhattan for a mobile coupon campaign aimed at solving mobile advertising's fundamental problem: Connecting mobile ads to real-world purchases.

The campaign involves ad tech startup Sparkfly serving L'Oreal product coupons within popular women's beauty app Pretty in my Pocket (PRIMP), which are then redeemed at Walgreens or Duane Reade stores in New York's Manhattan borough.

Because Sparkfly has partnerships with Walgreens and Duane Reade's point-of-sale providers, its able to collect data on exactly what items a consumer bought when redeeming one of its coupons. And because each coupon has a unique barcode, Sparkfly can then connect those itemized purchases to the consumer's PRIMP profile.

The deal allows L'Oreal to advertise its wares to its target audience and glean insight into which customers use coupons and which items are particularly popular at certain times. locations and among certain consumer segments.

Because the coupons are only redeemable at Walgreens and Duane Reade, those stores stand to have more foot traffic and higher sales. PRIMP is not only able to partner with a major brand (L'Oreal), its able to charge more for these coupons than for a standard mobile display ad. Most importantly, consumers get a discount, providing more utility for consumers.

Sparkfly CEO Catherine Tabor said the company receives a commission between 2% and 5% for each transaction it facilitates. Its publishing partners are able to charge approximately 20% more for Sparkfly-served mobile coupons than they do for mobile display ads, she added.

"I've been in the digital promotions space for quite some time, and its been interesting to see how the manufacturers have changed. They've been the farthest away from the customer and their data," Ms. Tabor said. "Mobile opens a huge opportunity for them to open up their own loyalty and brand programs that they can take into retailers. The missing piece has been, 'Does it actually drive sales?'"

Caroline Van Sickle, PRIMP CEO

Time spent online in the U.S. more than doubled from May 2010 to May 2013 from 434 billion minutes to 958 billion minutes, according to comScore, and that gain was almost entirely driven by time spent on mobile devices (smartphones and tablets). Tablet usage went from not even registering in May 2010 -- the iPad had been released just the month before -- to 100 billion minutes in a month three years later. Smartphone usage surged meanwhile, more than quadrupling from 81 billion minutes to 381 billion minutes over the same time period.

Mobile ad tracking hasn't advanced quite as fast, however, causing a rift between time spent on mobile devices and the portion of media budgets allocated to mobile. Due to the ever-growing number of devices, operating systems and ad units, tracking the effectiveness of mobile ads is, at best, an inexact science. (Google's head of mobile sales and strategy Jason Spero frequently refers to this as mobile advertising's "attribution problem.")

"I think mobile is kind of a different territory altogether," PRIMP CEO Caroline Van Sickle said. "I think there's an opportunity to change up the pricing and make it a little more legitimate with mobile. … We can be a lot smarter than just serving up an ad because a woman fits a certain demographic."